Auto buyer blues

Thursday

For the American consumer, the process of buying an automobile can resemble a “Car Wreck,” according to a book of the same name from Shrewsbury resident Mark Ragsdale, a former auto dealer.

In “Car Wreck: How You Got Rear-Ended, Run Over & Crushed by the U.S. Auto Industry,” Mr. Ragsdale discusses a variety of reasons why buying a car can be a frustrating experience. And the dealer, he believes, is not necessarily the villain.

“The consumer pays too much,” he said. “The dealer doesn’t make enough. The rest of the hidden players run off with the money.”

Those hidden players, Mr. Ragsdale said, include automakers, banks, the government and auto workers’ unions.

He was scheduled to discuss his book yesterday at Shrewsbury Public Library.

With more than 25 years of experience in the industry, Mr. Ragsdale previously owned and operated nine auto dealership franchises, including Pontiac, Cadillac, Chevrolet, Kia, Honda, Indian Motorcycle and Excelsior Henderson Motorcycle.

He said rebates are one problem facing the industry, even though they have been popular with consumers. He said rebates may help the individual consumer, but they “depreciate every other car on the market. It’s good for you, but it messes everything up” when the consumer attempts to trade in a seriously depreciated model.

This depreciation is one reason for consumer frustration at the dealership, he said. Consumers are often lured by ads promising a certain monthly loan payment, Mr. Ragsdale said, but the loans are often upside-down, meaning the buyer ends up owing more than the vehicle is worth. The average American consumer’s vehicle loan is upside down by $4,700, he said.

If a buyer with an upside-down loan tries to trade in a vehicle, the monthly payment for the new vehicle can be significantly higher than the amount mentioned in the ad because the buyer still owes money for the previous car, causing consumer frustration with the dealer when the problem lies with the economy and other factors, Mr. Ragsdale said.

Mr. Ragsdale supports the concept of leasing vehicles, although he knows this advice can be controversial. He said some refer to leasing as “fleecing,” but he believes that a leased vehicle puts the resale worry on the dealer, not the consumer.

With a leased vehicle, the consumer signs a contract, makes a set payment each month and turns in the car when the contract expires. In this situation, he said, depreciation is no longer a concern. And if the automaker has faced safety issues, such as Toyota is dealing with now, “at the end of the lease, that’s Toyota’s problem,” he said. The consumer starts again, with no depreciated vehicle and no auto debt.

“The world’s your oyster at that point,” he said.

For more information, visit www.markragsdale.com.

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